Without Prejudice Save As To Costs

Without Prejudice Save As to Costs

Author: Ian Aldridge, Progressive Legal

You may have found yourself reading through a legal document and encountering a phrase in bold stating, “without prejudice save as to costs”. In legal proceedings, certain phrases and terms can be confusing for those unfamiliar with the legal jargon.

The phrase “without prejudice save as to costs” is a legal term commonly used in settlement negotiations and legal proceedings. This page will shed light on the meaning and significance of this phrase.

What does ‘Without Prejudice’ mean?

The term “without prejudice” is a legal principle that allows parties engaged in a dispute to have open and frank discussions in an attempt to reach a settlement. It provides the guarantee that their words won’t be used against them later in Court. The purpose of this principle is to encourage parties to engage in meaningful negotiations.

It promotes a free exchange of information, fosters compromise, and allows parties to explore a wider range of potential resolutions. As a result, it significantly increases the chances of resolving a dispute amicably during settlement negotiations. 

What does ‘Save as to Costs’ mean?

The addition of ‘save as to costs’ modifies the phrase ‘without prejudice’ by introducing an exception to the rule. It means that while the substance of discussions must remain confidential, any financial offers made during the correspondence can be revealed in court.

The court may then use this information to determine an appropriate award for costs after delivering a judgment.  

What are ‘Costs’?

While it is usually the losing party in a court case that is required to pay legal costs, this burden can be reversed in the case of a rejected settlement offer.  These costs are commonly referred to as ‘indemnity costs’.  

Indemnity costs refer to the legal costs that you may incur throughout the court proceedings including fees, charges, expenses and remuneration. The indemnity costs include the costs from the time the offer was rejected up until the decision.  

What is the Purpose of ‘Without Prejudice Save as to Costs?’

The inclusion of “save as to costs” serves as a safeguard to prevent parties from making unreasonable offers during negotiations without any consequences. It encourages parties to act reasonably and consider the potential costs of litigation when making settlement offers. 

For example: 

Let’s say, John makes an offer to Simon during without prejudice discussions. Later, the Court determines that Simon acted unreasonably by refusing that offer and proceeding to litigation. The Court may decide to award costs against Simon. In this scenario, the Court can take into account the offer made during the without prejudice negotiations to assess Simon’s behaviour. 

How do I Apply Without Prejudice to Costs?

The term “without prejudice save as to costs” should be explicitly stated on written communication. For example, it may be at the top of a legal document or in the first line or subject of an email. The term should also be explicitly stated at the beginning of any oral correspondence. For example, at the beginning of a phone call or meeting. If on a call or at a meeting, it’s best that all parties confirm they agree to that before proceeding.  

This will grant confidentiality to both parties and ensure their right to bring the communication to Court when determining liability for costs. It is important to remember that this legal privilege only applies to genuine attempts to achieve settlement negotiations.  

When will ‘Without Prejudice Save as to Costs’ not apply?

The without prejudice protective label cannot be used to avoid liability completely. It will not apply: 

• In cases where the communication is illegal, fraudulent or not genuine; 
• In material that has already been exchanged with consent; and 
• In communication where there is an explicit statement indicating that it is not confidential.  

Furthermore, the Court may decide that the privilege is granted to some parts of a document and not others.  

Key Takeaways

The privilege associated with the phrase ‘without prejudice save as to costs’ is important because it allows parties to openly communicate about disputes. It removes the fear of the opposing party using information against you and increases the chance of achieving settlement negotiations. It also ensures financial protection for a party who is proposing reasonable offers and having them rejected.  

For more information on settlement negotiations, check out our articles, ‘What is a Calderbank Offer?’ and ‘What is an Offer of Compromise?’. 

If you have further questions on using the term ‘without prejudice save as to costs,’ do not hesitate to contact our team at Progressive Legal. Just make an enquiry below or contact our office at 1800 820 083. Our dispute resolution lawyers will assist you to reach settlement. 

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